A recently conducted survey has determined that financial gain is the biggest driving factor behind companies introducing environmental, social and governance (ESG) strategies. The survey analyzed responses from 354 cross-industry respondents across its business-to-business (B2B) website network and found that enhancing a business’ financial performance was the main factor for introducing ESG strategies for 33% of respondents.
This was partly because of a reduction in pressure from the government and the perceived importance of legislation, which made up 31% of the responses.
The survey’s findings demonstrate a shift in how ESG is being regarded, from a financial burden to a business opportunity.
Different studies have already demonstrated that ESG action in corporations can positively influence the financial performance of a company. For instance, a survey of more than 200 business leaders dealing with ESG discovered that 43% of companies with more than 10,000 employees reported financial returns, including access to new tax benefits and capital, as well as M&A’s.
Likewise, an analysis on the relationship between financial performance and ESG, which involved more than 1,000 research papers, found a positive link for 58% of ESG studies, which centered on operational metrics such as return on equity and stock price.
This latest survey also determined that sustainability action in corporations drive better financial performance through effects such as increased stakeholder reciprocation, improved company reputation, more innovation, better risk management and higher operational efficiency. In addition, the poll asked questions to measure the significance of ESG in business operations, determining that this was still a low priority for employees in the near-term.
The survey also noted that 37% of respondents expected important themes for the next year to be inflation, cybersecurity, geopolitics and digitalization, while only 10% expected ESG to be crucial in the same period.
The report, compiled by GlobalData, found that the increase observed in the proportion of respondents worried about cybersecurity coincided with a number of high-profile cyberattacks. Furthermore, it found that while 63% of companies had already implemented ESG strategies, 21% of respondents weren’t even aware of their existence.
In the report, it was noted that companies needed to interact with their employees when coming up with ESG strategies, because employee engagement is an important factor that can influence the success of these strategies.
We can see that ESG is becoming a crucial area of action for companies around the globe, even as the risk of litigation increases and more regulations are implemented. It is expected that ESG will greatly impact businesses in the next decade. The numerous benefits that can accrue from implementing ESG will continue to motivate companies such as First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) to make needed changes in order to enjoy those benefits.
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